Moving Abroad: Factors that Motivate Foreign Location of Headquarter Activities

Abstract

To what extent, why and where do multinational companies locate divisional headquarters (DHQs) abroad? This study of 30 of the largest listed companies in Norway over the 2000 to 2006 period shows that foreign located divisional headquarters have become relatively commonplace. A majority of DHQs located abroad are outcomes of foreign acquisitions, which suggests that obtaining legitimacy from local stakeholders such as customers, employees and investors is an important motivation. We also find that Norwegian companies emphasize efficiency and value creation in their location choices, as they tend to prefer other advanced and competitive countries as hosts for their DHQs. Distance form Norway is not significant. The off-shoring of strategic units such as DHQs is a phenomenon that occurs in advanced phases of companies’ internationalization, beyond the point when familiarity and proximity still are key decision-making factors.